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EU Commission proposes cap on Russian gas as Putin’s threatens with halting supplies

European Commission President Ursula von der Leyen said that the EU will propose a price cap on Russian gas and a set of other measures to cope with a full-fledged energy crisis. The announcement comes just after Russian President Vladimir Putin threatened to halt all supplies if the EU took such a step.

“We are facing an extraordinary situation, not only because Russia is an unreliable supplier, as we have witnessed over the last days, weeks, months, but also because Russia is actively manipulating the gas market,” stated the President of the European Commission reminding that the EU has already made some important steps to loosen the grip of Russia on the European energy market with reducing demand, diversifying supplies and investing in renewables.

Despite these efforts, the EU is now confronted with astronomic electricity prices for households and companies, and with enormous market volatility. “Therefore, the European Commission we will put forward a set of five different immediate measures,” announced Ursula von der Leyen.

Smart savings on electricity

In view of the global scarcity of energy saving electricity is of utmost importance. The European Commission intends to flatten the curve and avoid the peak demands when expensive gas comes into the market.

“We will propose a mandatory target for reducing electricity use at peak hours. And we will work very closely with the Member States to achieve this,” announced the President of the Commission.

Capping the revenues of companies producing low-cost electricity

The Commission also remarks that low-carbon energy sources are making enormous revenues because they have low costs but they have high prices on the market. The Commission noted that these extra revenues do not reflect their production costs, so it is now time for consumers to benefit from the low costs of low-carbon energy sources like renewables.

“We will propose to re-channel these unexpected profits to the Member States so that the Member States can support the vulnerable households and vulnerable companies,” underlined Ursula von der Leyen.

Solidarity contribution for fossil fuel companies

The same goes for the unexpected profits of oil and gas companies, which have also made massive profits. Therefore, the Commission will propose a solidarity contribution for them so they can contribute to overcoming the energy crisis.

“Member States should invest these revenues to support vulnerable households and vulnerable companies, but also to invest them in clean home-grown energy sources,” said the Commission President.

Liquidity support for utility companies

The fourth point of the Commission’s proposal package is addressing the energy utility companies that must be supported to be able to cope with the volatility of the markets.

“These companies are currently being requested to provide unexpected large amounts of funds, which threatens not only their capacity to trade but also the stability of the futures markets,” explained Ms von der Leyen. “Therefore, we will help to facilitate the liquidity support by Member States for energy companies and update our temporary framework to enable state guarantees to be delivered rapidly,” she announced.

Cap on Russian gas

“We all know that our sanctions are deeply grinding into the Russian economy, with a heavy negative impact. But Putin is partially buffering through fossil fuel revenues,” underlined Ms von der Leyen announcing that the Commission will propose a cap on Russian gas.

She reminded that at the beginning of the war, 40 per cent of the EU’s gas imports were coming from Russia, while today we are down to 9 per cent only.

President Vladimir Putin said today that Russia will stop supplying gas and oil if the EU decides to impose price caps. In an escalating standoff, EU energy ministers are due to hold an emergency meeting on Friday to discuss how to tackle the energy crisis.

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